Barclays re-enters Intelenet with 12.75% stake buy

MUMBAI: The UK-based Barclays Bank has acquired a 12.75% equity stake in back office services provider Intelenet Global Services. The bank has again become a shareholder in the firm, three years after selling its entire stake and exiting the company.

The BPO provider, which is majority-owned by private equity firm Blackstone, did not disclose the value of the deal.

Intelenet was a 50:50 joint venture between HDFC and Barclays before both the stakeholders exited the company in favour of Blackstone for a consideration of $200 million in a management-led buyout. The deal gave Blackstone an 80% stake in the firm and the Intelenet management 20%. Following the current transaction, in which fresh equity was issued to Barclays, Blackstone's stake has come down to around 66.25% and that of the Intelenet management to 16.5%.

Intelenet CEO Susir Kumar said the transaction would help to broadbase its investor base. "We are looking at listing in a year or two from now, and this helps us from a brand perspective. Barclays is a great brand and we believe that it will contribute more from a risk-control and governance standpoint," he said.

ET had reported in January that HDFC had also re-invested in Intelenet, picking up a 5% stake for about `41 crore, following which its vice-chairman and MD Keki Mistry joined the BPO firm's board.

"Both HDFC and Barclays have re-invested in Intelenet. Barclays had exited at that time because Intelenet was planning to expand its global footprint, acquire technology, consulting and other capabilities, which, it felt, was not its (Intelenet's) core area of business and would constitute a risk. But, they have now seen how we have grown and are profitable and they felt they could get upside from an equity point of view by investing in us," said Mr Kumar.

Intelenet's revenues now are about $240 million, compared with $ 90 million when Barclays had exited three years ago, he said. The investment has been made through SKR BPO Services, which is the holding company of Intelenet. Barclays already has a director on the Intelenet board and he will continue as its representative.

Barclays, even after exiting Intelenet as a stakeholder in 2007 and setting up its own captive, continued to give more business to Intelenet. As a percentage of overall revenues though, Barclays' contribution has come down, but it still is Intelenet's top customer. Mr Kumar said the current deal did not involve any commitment to increase business. Barclays would continue to operate its captive unit in India and outsource business to Intelenet, he said.

Banks and other financial services customers account for about 42% of Intelenet's revenues. Another 22% comes from travel and hospitality clients, and 10% each from healthcare and telecom clients.